baked box cheese close up

Hostess Brands (NasdaqCM:TWNK) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Hostess Brands, Inc. (NasdaqCM:TWNK) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.17/share on revenue of $253.1 million. The consensus earnings per share (EPS) of $0.17/share is based on a poll of 11 analysts and represents a growth in eps of 30.5% over the same quarter last year, when the company reported earnings of $0.13/share.

The revenue forecast of $253.1 million based on a poll of 7 analysts implies a year-over-year (YoY) growth in revenue of 11.4%. Last year the company reported $227.2 million in revenue for the quarter.

Expected to report EPS growth of 30.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $253.10 $227.21 11.4%
EPS $0.17 $0.13 30.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 1 quarter.

What are your expectations from Hostess Brands, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.15 $0.22 51.1% Beat
Q1, 2020 $0.13 $0.14 10.4% Beat
Q4, 2019 $0.16 $0.16 0% Met
Q3, 2019 $0.12 $0.13 8.6% Beat
Q2, 2019 $0.15 $0.17 11.3% Beat
Q1, 2019 $0.13 $0.14 7.0% Beat
Q4, 2018 $0.14 $0.17 17.5% Beat
Q3, 2018 $0.11 $0.10 −8.6% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $13.02 $13.37 2.7% Increase
May 8, 2020 $11.32 $12.02 6.2% Increase
February 26, 2020 $13.29 $12.61 −5.1% Decline
November 6, 2019 $12.65 $13.15 4.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.52, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.52 implies a 0.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

Hostess Brands, Inc. is currently trading at $12.64/share, down −1.6% for the day. The company is trading at approximately 86.1% of its 52-week high of $14.68/share. The company’s stock price is down −5.4% since the last earnings report and down −4.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 42.68 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqCM:TWNK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 32.08 and a forward P/E multiple of 17.16.

Hostess Brands, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.09. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $12.64
P/E Ratio 32.1x
P/E Ratio (Fwd) 17.2x
PEG Ratio −1.5
Total Debt / Total Capital 39.4%
Levered Free Cash Flow $87.738 million
EV / EBITDA 15.5x

Finbox

Hostess Brands, Inc. is a small-cap stock with a market capitalization of $1.573 billion and a total enterprise value of $2.651 billion. The company operates in the Consumer Staples sector and the Food Products industry.

Hostess Brands, Inc., a packaged food company, develops, manufactures, markets, sells, and distributes fresh sweet baked goods in the United States. It primarily offer a range of snack cakes, donuts, sweet rolls, breakfast pastries, snack pies, and related products. The company operates in two segments, Sweet Baked Goods and In-Store Bakery. The Sweet Baked Goods segment offers fresh and frozen sweet baked goods and bread products under the Hostess, Dolly Madison, Cloverhill, and Big Texas brands, as well as store branded products. The In-Store Bakery segment primarily provides Superior on Main branded eclairs, madeleines, brownies, and iced cookies in the bakery section of grocery and club stores. The company was formerly known as Gores Holdings, Inc. and changed its name to Hostess Brands, Inc. in November 2016. Hostess Brands, Inc. was founded in 1919 and is based in Lenexa, Kansas.

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